TEXT OF STORY
MARK AUSTIN THOMAS: The Bank of Wal-Mart. Sounds odd, but it could be the sound of the future. Both Wal-Mart and Home Depot want to get into the banking business and that has some members of Congress worried. Folks on both sides of this issue will make their best arguments during a hearing on Capitol Hill today. Marketplace’s Hillary Wicai lays out their positions
HILLARY WICAI: Wal-Mart says it’s just trying to save money by processing its own credit and debit transactions. And Home Depot says it just wants to provide home improvement loans to its customers.
But Massachusetts Congressman Barney Frank fears retailers might be tempted to make bad loans and accept higher loss rates than traditional banks.
Their retail revenue, after all, could be boosted through the extra business brought in through loan customers. Problem is, bad loans put pressure on the federally backed deposit insurance system. Frank says it’s a slippery slope.
BARNEY FRANK: “We don’t want a bank to be used, given its potential call on the insurance system and everything else, in a way that’s dominated by broader economic interests because that also puts undue competitive pressure on the other banks and may lead them to do unwise things.”
Frank, a Democrat and Representative Paul Gillmor, a Republican, introduced legislation earlier this week that would close the loophole that currently allows retailers to get in on banking.
In Washington, I’m Hillary Wicai for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.